Use the Following Information to Answer the Question(s)below

question 37

Multiple Choice

Use the following information to answer the question(s) below.
d'Anconia Copper is an all-equity firm with 60 million shares outstanding,which are currently trading at $20 per share.Last month,d'Anconia announced that it will change its capital structure by issuing $300 million in debt.The $200 million raised by this issue,plus another $200 million in cash that d'Anconia already has,will be used to repurchase existing shares of stock.Assume that capital markets are perfect.
-At the conclusion of this transaction,the value of a share of d'Anconia Copper will be closest to:

• A)$18.33.
• B)$20.00.
• C)$25.00.
• D)$27.50.

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Definitions:

Muckraker

Journalists and writers in the early 20th century United States who sought to expose social injustices, corruption, and abuses of power in business and government.

Ida Tarbell

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Events or actions involving public figures that lead to public outrage, legal actions, or political ramifications.

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Individuals or groups who combine efforts for social reform with the advocacy for conservation of natural resources, believing in sustainable use and protection of the environment through progressive policies.